African property investors shift focus to data centres and logistics

African real estate investors are turning their backs on traditional office blocks and shopping centres in favour of data centres and logistics warehouses, a major industry summit has heard.

The shift, reported from the API Summit, reflects a continent-wide reassessment of where property returns will come from over the next decade. Demand for cloud computing and e-commerce fulfilment is rising faster than supply, while office vacancies remain stubbornly high in several major cities.

South African listed property funds have already begun positioning themselves for this change. Several of the country’s largest real estate investment trusts have been increasing their exposure to industrial parks, distribution centres and specialised data facilities, both locally and in key African markets.

Why the pivot matters for South Africa

The country’s established logistics corridors, particularly around Johannesburg, Durban and Cape Town, make it a natural hub for warehousing and distribution. The same fibre optic networks that serve the country’s financial centres are increasingly being tapped to connect hyperscale data centres.

For ordinary South Africans, the consequences are indirect but real. Pension funds and retirement annuities hold significant stakes in listed property, so the sector’s ability to generate stable income affects millions of savers. A shift towards higher-yielding industrial assets could support distributions at a time when many traditional landlords are struggling to fill office space.

The construction and maintenance of these facilities also creates demand for electricians, security staff, technicians and logistics workers. Where new data centres are built, they require reliable power and cooling infrastructure, often spurring local municipal investment.

What the summit highlighted

According to reporting from the summit by Moneyweb, the discussion focused on the scale of opportunity across the continent. Africa still has a relatively small share of global data centre capacity, despite rising internet penetration and mobile money adoption. That gap is now being seen as an investment opportunity rather than a permanent condition.

Logistics real estate is following a similar trajectory. As African consumers buy more goods online, retailers and third-party logistics firms need modern warehouses close to transport links. Older, poorly located industrial buildings are increasingly obsolete.

The summit heard that investors are also looking beyond South Africa’s borders, with markets such as Kenya, Nigeria and Egypt attracting interest. But South Africa’s relatively mature financial system and established property sector give it an edge in attracting institutional capital.

The challenge of power and planning

Data centres are energy-intensive, and South Africa’s electricity supply remains a constraint. However, the same pressure has driven investment in renewable energy and backup systems, making some new facilities more resilient than the grid they rely on.

Municipal planning processes can also slow development. Zoning approvals and bulk infrastructure connections often take longer than investors would like. The summit discussion pointed to a need for clearer, faster processes if the continent is to capture the investment it is competing for.

For South African REITs, the opportunity is not without risk. Interest rates remain elevated, and construction costs have risen. But the direction of travel appears clear. The funds that moved early into industrial and digital infrastructure are now seeing the benefit.

Source: Moneyweb, API Summit: What lies ahead for African real estate